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                                                                   Exhibit 10.37


                                OPTION AGREEMENT

         AGREEMENT made as of December 3, 1996 between MicroTel International,
Inc., a Delaware corporation (hereinafter called the "Company"), and Elk
International Corporation Limited (hereinafter called "Optionee").

         NOW, THEREFORE, in consideration of the premises, it is agreed as
follows:

         1.  Grant of Option. The Company hereby grants to the Optionee the
right, privilege, and option to purchase 300,000 shares of the Company's common
stock, $.0033 par value per share (the "Shares"), at $.01 per Share, in the
manner and subject to the conditions hereinafter provided.

         2.  Time of Exercise of Option. The option as to the 300,000 Shares, or
any of them, may be exercised by the Optionee commencing as of the date hereof
and continuing during the period not later than the termination date set forth
in paragraph 4 hereof; and

         3.  Method of Exercise.
             (a) The option shall be exercised by written notice directed to the
Company at its principal place of business, accompanied by payment of the option
price for the number of Shares specified and paid for. The option may be
exercised to purchase all or any number of full Shares specified and paid for.

             (b) Payment for the Shares shall be made by cash, check (subject to
collection), or wire transfer.

             (c) The Company shall make immediate delivery of such Shares,
provided that if any law or regulation requires the Company to take any action
with respect to the Shares specified in such notice before the issuance thereof,
then the date of delivery of such Shares shall be extended for the period
necessary to take such action.

         4.  Termination of Option.
             (a) Except as otherwise stated in this Agreement, the option, to
the extent not previously exercised shall terminate forthwith on December 3,
1999, at 5:00 p.m., San Jose, California time (the "Expiration Date").

         5.  Outstanding Option. The option granted to the Optionee under this 
Agreement shall not be affected by any option previously granted to him to 
purchase Shares of the Company, if any.

         6.  Reclassification, Consolidation, or Merger. If and to the extent
that the number of issued shares of common stock of the Company shall be
increased or reduced by a change in par value, split-up, reclassification,
distribution of a dividend payable in shares, or the like, the number of Shares
subject to option and the
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option price for them shall be proportionately adjusted. If the Company is
reorganized or consolidated or merged with another corporation, the Optionee
shall be entitled to receive options covering Shares of such reorganized,
consolidated, or merged company in the same proportion, at an equivalent price,
and subject to the same conditions. For purposes of the preceding sentence, the
excess of the aggregate fair market value of the Shares subject to the option
immediately after the reorganization, consolidation, or merger over the
aggregate option price of such Shares shall not be more than the excess of the
aggregate fair market value of all Shares subject to the option immediately
before such reorganization, consolidation, or merger over the aggregate option
price of such Shares. The new option or assumption of the old option shall not
give the Optionee additional benefits which he did not have under the old
option.

         7.  Rights Prior to Exercise of Option. The option is nontransferable
by the Optionee and during his lifetime is exercisable only by him, and the
Optionee shall have no rights as a shareholder in the Shares underlying the
option until payment of the option price and delivery to him of such Shares as
herein provided.

         8.  Registration Rights. If the Company at any time proposes to
register any of its securities under the Securities Act of 1933, as amended (the
"1933 Act")(other than pursuant to Form S-8 or other comparable form), the
Company shall include the shares of common stock subject to this Option in such
registration. The Company shall at such time give prompt written notice to
Optionee of its intention to effect such registration and of Optionee's rights
under such proposed registration, and upon the request of Optionee delivered to
the Company within twenty (20) days after giving of such notice (which request
shall specify the number of shares of common stock intended to be disposed of by
Optionee), the Company shall include such shares of common stock requested to be
included in such registration; provided, however, that if, at any time after
giving such written notice of the Company's intention to register any of
Optionee's shares of common stock and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to proceed with such registration statement,
the Company may give written notice of such determination to Optionee and
thereupon shall be relieved of its obligation to register such shares of common
stock (but not from its obligation to pay registration expenses in connection
therewith or to register such shares of Common Stock in a subsequent
registration).

         All expenses incurred in any registration of Optionee's common stock
under this Agreement shall be paid by the Company, including, without
limitation, printing expenses, fees and disbursements of counsel for the
Company, all registration and filing fees for Optionee's common stock under
federal and State securities laws, and expenses of complying with the securities
or blue sky laws of any jurisdiction in which Optionee reasonably
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requests the registration of his common stock; provided, however, the Company
shall not be liable for (a) any discounts or commissions to any underwriter; (b)
any stock transfer taxes incurred; or (c) the fees and expenses of counsel for
Optionee, provided that the Company will pay the costs and expenses of Company
counsel.

         9.  Approval by Directors. The granting and adoption of the option is
being made pursuant to a the ratification by the Board of Directors.

         10. Binding Effect. This Agreement shall be binding upon the heirs,
executors, administrators, and successors of the parties hereto.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.


                                       MICROTEL INTERNATIONAL. INC.



                                       By: /s/ Jack Talan
                                          --------------------------------------
                                          Chairman
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                                  PURCHASE FORM

                                                               December 23, 1996

To:  MicroTel International, Inc.

         The undersigned hereby irrevocably elects to exercise the attached
Option Certificate to the extent of 300,000 shares of Common Stock of MicroTel
International, Inc., and herewith makes payment of $3,000 in payment of the
purchase price therefor.

                     INSTRUCTIONS FOR REGISTRATION OF STOCK

Name:    Elk International Corporation Limited
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                  (Please typewrite or print in block letters)


                                  ELK INTERNATIONAL CORPORATION LIMITED



                                  By:  [ILLEGIBLE] 
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